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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

     
(Mark one)
[X]   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
     
    For the quarterly period ended September 30, 2003 or
     
[  ]   Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _________ to _________ .

Commission file number 1-13796

Gray Television, Inc.

(Exact name of registrant as specified in its charter)
     
Georgia   58-0285030
 
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification Number)
     
4370 Peachtree Road, NE, Atlanta, Georgia   30319
 
(Address of principal executive offices)   (Zip code)

(404) 504-9828

(Registrant’s telephone number, including area code)

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes þ No o

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

     
Common Stock, (No Par Value)   Class A Common Stock, (No Par Value)
 
43,808,388 shares as of November 10, 2003   5,830,820 shares as of November 10, 2003

 

 

INDEX

GRAY TELEVISION, INC.

                   
PART I.    
FINANCIAL INFORMATION
   PAGE
 
Item 1.    
Financial Statements
        
     
         
Condensed consolidated balance sheets – September 30, 2003 (Unaudited) and December 31, 2002
     3  
     
         
Condensed consolidated statements of operations (Unaudited) – Three months ended September 30, 2003 and 2002 Nine months ended September 30, 2003 and 2002
     5  
     
         
Condensed consolidated statement of stockholders’ equity (Unaudited) — Nine months ended September 30, 2003
     6  
     
         
Condensed consolidated statements of cash flows (Unaudited) – Nine months ended September 30, 2003 and 2002
     7  
     
         
Notes to condensed consolidated financial statements (Unaudited) – September 30, 2003
     8  
     
Item 2.    
Management’s Discussion and Analysis of Financial Condition and Results of Operations
     16  
     
Item 3.    
Quantitative and Qualitative Disclosure About Market Risk
     23  
     
Item 4.    
Controls and Procedures
     23  
     
PART II.    
OTHER INFORMATION
        
     
Item 1.    
Legal Proceedings
     24  
     
Item 6.    
Exhibits and Reports on Form 8-K
     24  
     
SIGNATURES  
 
     25  

2

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

                     
        September 30,   December 31,
        2003   2002
       
 
        (Unaudited)        
Assets:
                
Current assets:
                
   
Cash and cash equivalents
   $ 10,208     $ 12,915  
   
Trade accounts receivable, less allowance for doubtful accounts of $890 and
$1,339 respectively
     50,753       54,770  
   
Recoverable income taxes
   679       234  
   
Inventories
     1,063       1,178  
   
Current portion of program broadcast rights, net
     9,956       8,082  
   
Other current assets
     2,104       1,691  
 
    
     
 
Total current assets
     74,763       78,870  
 
    
     
 
 
                
Property and equipment:
                
   
Land
     17,587       16,758  
   
Buildings and improvements
     33,370       32,767  
   
Equipment
     180,530       164,834  
 
    
     
 
 
     231,487       214,359  
   
Allowance for depreciation
     (101,433 )     (86,127 )
 
    
     
 
 
     130,054       128,232  
 
                
Deferred loan costs, net
     13,580       13,756  
Broadcast licenses
     878,108       878,108  
Goodwill
     174,187       173,341  
Other intangible assets, net
     4,193       9,423  
Other
     15,739       14,994  
 
    
     
 
 
   $ 1,290,624     $ 1,296,724  
 
    
     
 

See notes to condensed consolidated financial statements.

3

 

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(in thousands)

                     
        September 30,   December 31,
        2003   2002
       
 
        (Unaudited)        
Liabilities and stockholders’ equity:
                
Current liabilities:
                
   
Trade accounts payable
   $ 2,861     $ 6,044  
   
Employee compensation and benefits
     11,366       13,454  
   
Accrued interest
     10,373       1,119  
   
Other accrued expenses
     4,310       3,276  
   
Current portion of program broadcast obligations
     11,528       9,472  
   
Acquisition related liabilities
     3,208       8,051  
   
Deferred revenue
     3,391       3,791  
   
Current portion of long-term debt
   153       887  
 
    
     
 
Total current liabilities
     47,190       46,094  
Long-term debt, less current portion
     655,751       657,333  
Program broadcast obligations, less current portion
     1,131       1,126  
Deferred income taxes
     181,707       174,765  
Other
     8,148       8,796  
 
    
     
 
 
     893,927       888,114  
 
    
     
 
Commitments and contingencies
                
Redeemable Serial Preferred Stock, no par value; cumulative; convertible;
designated 5 shares, issued and outstanding 4 shares ($40,000 aggregate
liquidation value)
     39,255       39,190  
 
    
     
 
Stockholders’ equity:
                
   
Common Stock, no par value; authorized 50,000 shares, respectively; issued
43,808 and 43,436, respectively
     389,542       385,762  
   
Class A Common Stock, no par value; authorized 15,000 shares; issued 7,962 shares, respectively
     15,241       20,173  
   
Retained deficit
     (20,894 )     (28,176 )
   
Accumulated other comprehensive loss, net of tax
   (184 )     -0-  
   
Unearned compensation
   (373 )     -0-  
 
    
     
 
 
     383,332       377,759  
 
                
   
Treasury Stock at cost, Common Stock, 12 and -0- shares, respectively
   (200 )     -0-  
   
Treasury Stock at cost, Class A Common Stock, 2,131 and 1,113 shares, respectively
   (25,690 )     (8,339 )
 
    
     
 
 
     357,442       369,420  
 
    
     
 
 
   $ 1,290,624     $ 1,296,724  
 
    
     
 

See notes to condensed consolidated financial statements.

4

 

GRAY TELEVISION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(in thousands except for per share data)

                                   
      Three Months Ended   Nine Months Ended
      September 30,   September 30,
     
 
      2003   2002   2003   2002
     
 
 
 
Operating revenues:
                                
 
Broadcasting (less agency commissions)
   $ 60,372     $ 29,535     $ 176,524     $ 84,541  
 
Publishing
     10,995       10,858       32,535       32,074  
 
Paging
     1,985       2,116       5,915       6,199  
 
    
     
     
     
 
 
     73,352       42,509       214,974       122,814  
 
    
     
     
     
 
 
                                
Operating expenses:
                                
Operating expenses before depreciation and amortization
                                
 
Broadcasting
     35,657       16,647       106,299       48,622  
 
Publishing
     7,917       7,790       23,605       23,210  
 
Paging
     1,384       1,360       4,234       4,114  
 
Corporate and administrative
     1,916       1,169       6,159       3,285  
Depreciation and amortization
     6,990       3,632       21,159       11,065  
 
    
     
     
     
 
Total operating expenses
     53,864       30,598       161,456       90,296  
 
    
     
     
     
 
Operating income
     19,488       11,911       53,518       32,518  
Miscellaneous income (expense), net
     16       (42 )     132       55  
Appreciation in value of derivatives, net
     -0-       851       -0-       1,581  
Interest expense
     (10,458 )     (8,049 )     (32,700 )     (24,915 )
Loss on early extinguishment of debt
     -0-       -0-       -0-       (11,275 )
 
    
     
     
     
 
Income (loss) before income taxes and cumulative effect of accounting change
     9,046       4,671       20,950       (2,036 )
Federal and state income tax expense (benefit)
     3,490       1,555       8,191       (786 )
 
    
     
     
     
 
Net income (loss) before cumulative effect of accounting change
     5,556       3,116       12,759       (1,250 )
Cumulative effect of accounting change, net of income tax benefit of $8,873
     -0-       -0-       -0-       (30,592 )
 
    
     
     
     
 
Net income (loss)
     5,556       3,116       12,759       (31,842 )
Preferred dividends
     822       800       2,465       1,603  
Preferred dividends associated with the redemption of preferred stock
     -0-       -0-       -0-       3,969  
 
    
     
     
     
 
Net income (loss) available to common stockholders
   $ 4,734     $ 2,316     $ 10,294     $ (37,414 )
 
    
     
     
     
 
 
                                
Basic per share information:
                                
Net income (loss) before cumulative effect of accounting change available to common stockholders
   $ 0.09     $ 0.15     $ 0.20     $ (0.43 )
Cumulative effect of accounting change, net of income tax benefit
     0.00       0.00       0.00       (1.95 )
 
    
     
     
     
 
Net income (loss) available to common stockholders
   $ 0.09     $ 0.15     $ 0.20     $ (2.38 )
 
    
     
     
     
 
Weighted average shares outstanding
     50,095       15,752       50,275       15,692  
 
    
     
     
     
 
 
                                
Diluted per share information:
                                
Net income (loss) before cumulative effect of accounting change available to common stockholders
   $ 0.09     $ 0.14     $ 0.20     $ (0.43 )
Cumulative effect of accounting change, net of income tax benefit
     0.00       0.00       0.00       (1.95 )
 
    
     
     
     
 
Net income (loss) available to common stockholders
   $ 0.09     $ 0.14     $ 0.20     $ (2.38 )
 
    
     
     
     
 
Weighted average shares outstanding
     50,596       16,027       50,574       15,692  
 
    
     
     
     
 

See notes to condensed consolidated financial statements.

5

 

GRAY TELEVISION, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)
(in thousands except for number of shares)

                                                           
      Class A                           Class A
      Common Stock   Common Stock           Treasury Stock
     
 
  Retained    
      Shares   Amount   Shares   Amount   Deficit   Shares   Amount
     
 
 
 
 
 
 
Balance at December 31, 2002
     7,961,574     $ 20,173       43,435,704     $ 385,762     $ (28,176 )     (1,113,107 )   $ (8,339 )
Net income for the Nine months ended September 30, 2003
                                     12,759                  
Common Stock dividends ($0.06 per share)
                                     (3,012 )                
Preferred Stock dividends
                                     (2,465 )                
Issuance of Common Stock:
                                                        
 
401(k) plan
                     142,628       1,514                          
 
Non-qualified stock plan
                     184,920       1,767                          
 
Directors’ stock plan
                     168       2                          
 
Directors’ restricted stock plan